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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
OCTOBER 22, 1998
(Date of Event)
BOLLINGER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2502577
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
0-22716
(Commission File Number)
602 FOUNTAIN PARKWAY, GRAND PRAIRIE, TEXAS 75050
(Address of principal executive offices) (Zip Code)
(972) 343-1000
(Registrant's telephone number, including area code)
Total Number of
sequential numbered pages 4 Exhibit Index on page 4
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ITEM 2. ACQUISITION OF ASSETS.
On October 22, 1998, Bollinger Industries, L.P. and its parent company
Bollinger Industries, Inc. consummated the purchase of the retail products
division of The Step Company. The purchase price under the purchase agreement
was $3,575,000 plus the market value of 300,000 restricted common shares of
Bollinger stock.
The description contained herein of the purchase is qualified in its
entirety by reference to the Purchase Agreement, dated as of October 15, 1998,
by and among the Registrant, Bollinger Industries, L. P., and The Step Company
and the Press Release dated October 22, 1998 which are attached hereto as
Exhibits 10.65 and 10.66, respectively, and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
As of the date of filing of the Current Report on Form 8-K, it is
impractical for the Registrant to provide the financial statements required by
this Item 7(a)(4) of Form 8-K, such financial statements shall be filed by
amendment to this Form 8-K no later than 60 days after November 5, 1998.
(b) Pro Forma Financial Information.
As of the date of filing of the Current Report on Form 8-K, it is
impractical for the Registrant to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after November 5, 1998.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set forth
elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOLLINGER INDUSTRIES, INC.
Date: November 5, 1998 /s/ Rose Turner
---------------- ---------------------------------
Rose Turner
Executive Vice President - Finance,
Chief Financial Officer, Treasurer and
Secretary
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BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
EXHIBITS DESCRIPTION
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Item No. 2
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10.65 ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of October 15, 1998, and consummated October
22, 1998, by and among Bollinger Industries, L. P.,
("Purchaser") a Texas limited partnership and its parent
company Bollinger Industries, Inc., a Delaware corporation and
The Step Company, a Georgia corporation ("Seller").
Item No. 20
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10.66 Press release dated October 22, 1998 - Bollinger Acquires
Retail Products Division of The Step Company.
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EXHIBIT 10.65
ASSET PURCHASE AGREEMENT
between
THE STEP COMPANY
a Georgia corporation
as Seller
and
BOLLINGER INDUSTRIES, L.P.
a Texas limited partnership
as Purchaser
Effective: September 30, 1998
Dated: October 15, 1998
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TABLE OF CONTENTS
<TABLE>
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1. DEFINITIONS
2. SALE, PURCHASE, AND LICENSE
(a) Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Licenses and Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . 4
(e) Allocations of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(g) Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. SELLER'S REPRESENTATIONS AND WARRANTIES
(a) Organization of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Authorization of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(f) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(g) Events Subsequent to Most Recent Fiscal Year End . . . . . . . . . . . . . . . 5
(h) Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 5
(i) Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(j) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(k) Les Mills License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(l) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(m) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(n) Liability Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(o) Product Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(p) Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(q) Environment, Health, and Safety . . . . . . . . . . . . . . . . . . . . . . . . 10
(r) Notices and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(s) Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(t) Pending Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(u) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. PURCHASER'S AND BOLLINGER'S REPRESENTATIONS AND
WARRANTIES
(a) Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Authorization of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Authorization of Issuance of Stock Consideration . . . . . . . . . . . . . . . 11
(d) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Pending Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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5. THE CLOSING
(a) Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Items Delivered at the Closing . . . . . . . . . . . . . . . . . . . . . . . . 12
6. INDEMNIFICATION BY SELLER
(a) Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Bulk Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7. INDEMNIFICATION BY PURCHASER AND BOLLINGER
(a) Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Operation of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS
(a) Threshold Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Ceiling Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Sole Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . 15
9. POST-CLOSING AND OTHER MATTERS
(a) Product Warranty and Returns After Closing . . . . . . . . . . . . . . . . . . 15
(b) Sales and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Post Closing Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Prior Controversy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Stock Consideration, Stock Option Agreement, and Convertible Note . . . . . . 16
(f) Post-Closing Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10. RECOUPMENT UNDER THE CONVERTIBLE NOTE
(a) Right to Recoupment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Recoupment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Good Faith Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11. MISCELLANEOUS
(a) Resolution of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Bulk Transfer Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Press Releases and Public Announcements . . . . . . . . . . . . . . . . . . . . 19
(d) No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Succession and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(i) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(j) Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(k) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(l) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(m) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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(n) General Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . 21
(o) Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(p) Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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ASSET PURCHASE AGREEMENT
This asset purchase agreement ("Agreement") is entered into by The
Step Company, a Georgia corporation ("Seller"), Bollinger Industries, Inc., a
Delaware corporation ("Bollinger") and Bollinger Industries, L.P., a Texas
limited partnership ("Purchaser") (collectively the "Parties").
Seller and Purchaser have reached an understanding with respect to the
sale by Seller and the purchase by Purchaser of certain assets of Seller, as
same are more particularly described in this Agreement.
In consideration of the rights, obligations, representations,
warranties, and covenants provided for in this Agreement, the Parties agree as
follows.
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings indicated below:
1. "Affiliate" means, with respect to any individual,
partnership, limited liability company, corporation, unincorporated
organization or association, trust (including the trustees thereof in their
capacity as such) or other entity (collectively a "Person"), any other Person
which either directly or indirectly controls, is controlled by or is under
common control with the first Person.
2. "Body Pump Sublicense" means the sublicense agreement
between Seller and Purchaser that is being executed contemporaneously with this
Agreement.
3. "Business" means Seller's operations related to the
manufacture, sale, marketing, and distribution of the Product in the United
States, Mexico, and Puerto Rico (the "Territory") to the sporting goods, mass
merchandising, and catalog retail market (the "Retail Market"); provided,
however, that Seller is reserving and not selling its operations relating to:
(i) the manufacture, sale, marketing, and distribution of the Product to the
health, fitness, and exercise club market, and (ii) direct sales to individual
customers in the Territory through the Internet and other mediums, but
specifically excluding the TV infomercial, QVC, Home Shopping Network, and
other similar mediums (the rights to which are being acquired by Purchaser).
4. "Closing" means the closing of the sale and purchase
of assets contemplated in this Agreement and described in SECTION 5 of this
Agreement.
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5. "Confidential Information" means any confidential
information to the extent it relates to the conduct or details of the Business,
including, without limitation, methods of operation, customers, customer and
supplier lists, products, manufacturing and production processes and
techniques, technical data, drawings, specification, pricing and cost lists,
marketing plans and proposals, designs, technology, inventions, trade secrets,
know-how, software, competitors, markets or other specialized information or
proprietary matters.
6. "Consulting Agreement" means the consulting and
noncompetition agreement between Seller and Purchaser that is being executed
contemporaneously with this Agreement.
7. "Effective Date" means September 30, 1998.
8. "Environmental, Health, and Safety Laws" mean the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of
the environment, public health and safety, or employee health and safety,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, gasoline and other fuels, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
9. "Extremely Hazardous Substance" has the meaning set
forth in Sec. 302 of the Emergency Planning and Community Right-to-Know Act of
1986, as amended.
10. "Intellectual Property" means Seller's (1) inventions
(whether patentable or unpatentable), patents, and improvements, modifications,
and changes thereto, (2) trademarks, logos, trade names, and corporate names,
(3) copyrightable works, copyrights, and renewals in connection therewith, (4)
Confidential Information, (5) other proprietary rights, and (6) copies and
tangible embodiments thereof (in whatever form or medium) that are described on
EXHIBIT 1(j) and designated as either Seller owned or third party owned.
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11. "Knowledge" when used in connection with any
representation or warranty by Seller in this Agreement, or in any certificate
delivered pursuant to this Agreement, and when used in phrases such as "to
Seller's knowledge," "to the knowledge of Seller," "Seller has no knowledge,"
or other similar phrases, shall be construed to include all facts that the
following persons actually knew, and all facts that the following persons
should have reasonably concluded from the facts known, at the time such
representation or warranty was made or effective: Richard P. Boggs, Lyle Ray
Irwin, Terry Browning, and Mike Yardley.
12. "Les Mills License" means the license currently held
by Seller with regard to the Body Pump, a copy of which is attached as EXHIBIT
1(l) to this Agreement.
13. "Personal Property" means those creative materials,
advertising and promotional materials, and printed, multi-media, or written
materials, customer and supplier lists, drawings, designs, specifications,
pricing and cost lists, written technical data, and written marketing plans and
proposals relating to the Business that are described on EXHIBIT 1(m).
14. "Product" means those fitness products identified on
EXHIBIT 1(n).
15. "Step License" means the license agreement between
Seller and Purchaser that is being executed contemporaneously with this
Agreement.
16. "Registration Rights Agreement" means the agreement
between Seller, Purchaser, and Bollinger concerning the registration of certain
"Securities" (as therein defined) that is being executed contemporaneously with
this Agreement.
17. "Stock Option Agreement" means the stock option
agreement between Seller and Bollinger that is being executed contemporaneously
with this Agreement.
2. SALE, PURCHASE, AND LICENSE.
1. PURCHASE AND SALE. On and subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of Seller, Bollinger, and Purchaser contained in this Agreement, at
the Closing Purchaser purchases from Seller, and Seller sells, transfers,
conveys, and sets over to Purchaser, as of the Effective Date, the Business as
a going concern and all of Seller's right, title, and interest in
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the Personal Property and the other assets set forth on EXHIBIT 2(a) for the
consideration specified in this Section.
2. PURCHASE PRICE. The total consideration for the
purchase and sale is $3,575,000 plus the market value of the Stock
Consideration (as defined below) on the Effective Date (the "Purchase Price").
3. PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be paid by Purchaser to Seller at the Closing as follows:
1. a cash payment of $2,175,000 delivered to
Seller by a wire transfer of immediately available federal funds to the bank
account designated by Seller (the "Closing Cash Payment");
2. the delivery to Seller of the convertible
promissory note in the principal amount of $1,400,000 in a form agreed to by
Purchaser and Seller (the "Convertible Note"); and
3. the delivery to Seller of 300,000 restricted
common shares of Bollinger (the "Stock Consideration").
4. LICENSES AND STOCK OPTION AGREEMENT. As a condition
to the Closing and as a part of the consideration for this Agreement, Seller
and Purchaser and/or Bollinger, as the case may be, agree to enter into at the
Closing the Step License, Body Pump Sublicense, Consulting Agreement,
Registration Rights Agreement, and Stock Option Agreement.
5. ALLOCATIONS OF PURCHASE PRICE. The Parties shall
mutually agree on an allocation of the Purchase Price to the Personal Property
and complete EXHIBIT 2(e) with such allocation. Seller and Purchaser further
agree that (1) these allocations shall be made as provided in Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"), (2) each shall file
Form 8594 (Asset Allocation Statement Under Section 1060) on a timely basis for
reporting the allocation, (3) the filing shall be consistent with the
allocations set forth on EXHIBIT 2(E), and (d) neither will take any position
on its respective income tax return that is inconsistent with the allocation.
6. ASSUMED LIABILITIES. At Closing, Purchaser assumes,
and agrees to pay, perform, and discharge in accordance with their respective
terms, the agreements, liabilities, and obligations of Seller that are
described on EXHIBIT 2(f) (the "Assumed Liabilities").
7. RETAINED LIABILITIES. Except for the Assumed
Liabilities, Purchaser does not assume or agree to pay, satisfy,
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discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any other document delivered at the Closing
pursuant to this Agreement, or as a result of the consummation of the
transactions contemplated by this Agreement, to have assumed, or to have agreed
to pay, satisfy, discharge or perform, any liability, obligation or
indebtedness of Seller including, without limitation, any liabilities or
obligations with respect to defective products sold by Seller prior to Closing,
except to the limited extent provided for in SECTION 9(A), whether primary or
secondary, direct or indirect (the "Retained Liabilities").
3. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents
and warrants to Purchaser and Bollinger that the statements contained in this
Section are correct and complete as of the Closing Date (unless another date
for such representation and warranty is specifically set forth in this
Agreement).
1. ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and such other states or jurisdictions where
the failure to so qualify would have a material, adverse effect on its Business
or the Personal Property.
2. AUTHORIZATION OF TRANSACTION. Seller has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Without limiting the generality of the foregoing, the
board of directors of Seller has authorized the execution, delivery, and
performance of this Agreement by Seller.
3. NONCONTRAVENTION. Except as described on EXHIBIT
3(C), neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (1) violate any
statute, regulation, order, or other restriction of any government,
governmental agency, or court to which Seller is subject or any provision of
the charter or bylaws of Seller, or (2) cause a breach, default, or termination
with regard to any rights to the Intellectual Property or any other contract
rights.
4. BROKERS' FEES. Seller has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Purchaser or
Bollinger could become liable or obligated.
5. TITLE. Except as described on EXHIBIT 3(E), Seller
has good and marketable title to, or a valid contract
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interest in, the Personal Property, free and clear of all liens, security
interests, obligations, or encumbrances.
6. FINANCIAL STATEMENTS. The financial data of Seller
relating to the Business which is described on EXHIBIT 3(f) and which has been
supplied to Purchaser presents fairly the financial condition and the results
of operations of the Business and is correct and complete in all material
respects.
7. EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.
There has not been any material adverse change in the business, financial
condition, operations, or results of operations of Seller since December 31,
1997.
8. ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no
liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise, including, without limitation, tax liabilities due or
to become due, whether incurred in or in respect of or measured by the income
of Seller or arising out of transactions entered into, that will encumber the
Personal Property or the Business after the Closing Date other than the Assumed
Liabilities and Seller's obligations under the Les Mills License.
9. LEGAL COMPLIANCE. Seller is in compliance in all
material respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof). Except as set forth on EXHIBIT 3(i) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is pending against
Seller, and no notice of same has been received by Seller, alleging any failure
so to comply.
10. TAX MATTERS.
1. Seller has filed, within the applicable time
period including extensions, all local, state, and federal income,
informational, franchise, sales, and other tax returns of any nature and type
that it is required to file, all such tax returns were correct and complete in
all material respects, and all taxes, fees, penalties, interest, or other
expenses related thereto have been paid in full or provision has been made by
Seller therefor.
2. Seller has withheld and paid all taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party.
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3. There is no dispute or claim concerning any
tax liability or similar liability of Seller pending or, to the knowledge of
Seller, threatened by any taxing authority.
4. The federal identification number of Seller
as set forth on the signature page of this Agreement is correct.
5. Seller is not subject to backup withholding
because it is exempt from backup withholding or it has not been notified by the
Internal Revenue Service that it is subject to backup withholding as a result
of a failure to report all interest or dividends, or the Internal Revenue
Service has notified it that it is no longer subject to backup withholding.
11. LES MILLS LICENSE. EXHIBIT 1(l) is a true, correct,
and complete copy of the Les Mills License (as amended to date), and with
respect to the Les Mills license:
1. it is legal, valid, binding, enforceable, and
in full force and effect;
2. it will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated by this Agreement;
3. to the knowledge of Seller no party to the
Les Mills License is in breach or default, and no event has occurred which with
notice of default would permit termination, modification, or acceleration
thereunder;
4. to the knowledge of Seller no party to the
license has repudiated any provision thereof;
5. to the knowledge of Seller the Product that
is the subject of the Les Mills License is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
6. to the knowledge of Seller no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand is
pending or threatened which challenges the legality, validity, or
enforceability of the underlying Product which is the subject matter of the Les
Mills License; and
7. Seller has not granted any sublicense or
similar right with respect to the Retail Market under the Les Mills License
except pursuant to this Agreement and as set forth on EXHIBIT 3(k)(7).
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12. INTELLECTUAL PROPERTY.
1. Seller owns, or has the right to use pursuant
to a license, sublicense, agreement, or permission, all the Intellectual
Property necessary for the operation of the Business as currently conducted.
Each item of Intellectual Property set forth on EXHIBIT 3(l)(1) will be
licensed for use to Purchaser pursuant to the Step License or the Body Pump
Sublicense.
2. Except as disclosed on EXHIBIT 3(l)(2), to
the knowledge of Seller, Seller's use of the Intellectual Property identified
on EXHIBIT 3(l)(1) is not interfering with, infringing upon, misappropriating,
or otherwise coming into conflict with any intellectual or confidential
property rights of third parties, and except as set forth on EXHIBIT 3(l)(2)
Seller has never received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that Seller must license or refrain from using any
intellectual or confidential property rights of any third party). To the
knowledge of Seller, except as set forth on EXHIBIT 3(l)(2), no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of Seller that are the subject
of this Agreement.
3. With regard to Seller's Intellectual
Property, EXHIBIT 1(j) identifies each (A) patent or registration issued to
Seller, (B) pending patent application or application for registration which
Seller has made with respect to the Business, and (C) license, agreement, or
other permission which Seller has granted to any third party with respect to
the Retail Market in the Territory. Seller has made available to Purchaser
correct and complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and has made
available to Purchaser correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each such
item. EXHIBIT 1(j) also identifies each trade name or unregistered trademark
used by Seller in its Business. As to each of the foregoing items described in
this SECTION 3(l)(3):
1. Seller possesses such right, title,
and interest in and to the item, free and clear of any lien, security
interests, encumbrance, license, or other restriction with respect to the
Retail Market in the Territory, sufficient for Seller to perform its
obligations to Purchaser and Bollinger as contemplated by this Agreement;
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2. to the knowledge of Seller the item
is not subject to any outstanding injunction, judgment, order, decree, ruling,
or charge;
3. no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is pending, or to
the knowledge of Seller is threatened, which challenges the legality, validity,
enforceability, use, or ownership of the item; and
4. Except as disclosed on EXHIBIT
3(l)(3), Seller has never agreed to any infringement, misappropriation, or
other conflict with respect thereto.
4. EXHIBIT 1(j) identifies each item of
Intellectual Property that a third party owns and Seller uses in the Business
pursuant to any license, sublicense, agreement, or permission. Seller has made
available to the Purchaser correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each such item of Intellectual Property described in this SECTION 3(l)(4):
1. the license, sublicense, agreement,
or permission covering such item is legal, valid, binding, enforceable, and in
full force and effect;
2. such license, sublicense, agreement,
or permission will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby;
3. to the knowledge of Seller no party
to the license, sublicense, agreement, or permission is in breach or default,
and no event has occurred which with notice of default would permit
termination, modification, or acceleration thereunder;
4. to the knowledge of Seller no party
to the license, sublicense, agreement, or permission has repudiated any
provision thereof;
5. to the knowledge of Seller with
respect to each sublicense, the representations and warranties set forth in
subsections (A) through (D) are true and correct with respect to the underlying
license;
6. to the knowledge of Seller the
underlying item of Intellectual Property is not subject to any
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outstanding injunction, judgment, order, decree, ruling, or charge;
7. to the knowledge of Seller no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
8. Except as set forth on EXHIBIT
3(K)(7), Seller has not granted any sublicense or similar right with respect to
the Retail Market in the Territory under the license, sublicense, agreement, or
permission.
13. LITIGATION. EXHIBIT 3(m) sets forth each instance in
which Seller (1) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (2) is a party, or to the knowledge of Seller is
threatened to be made a party, to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits proceedings, hearings, and
investigations set forth in EXHIBIT 3(m) is expected to result in any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of the Business to be acquired by Purchaser.
14. LIABILITY CLAIMS. EXHIBIT 3(n) sets forth with
regard to Product items sold in the Business prior to Closing: (1) each claim
for coverage that has been filed by Seller since December 31, 1996 under any
liability insurance policy, and (2) each event or occurrence since December 31,
1996 in respect of which a claim for coverage under any liability insurance
policy could have been or could be filed by Seller if it chose to do so.
15. PRODUCT WARRANTY. Based on Seller's knowledge, all
of the Product manufactured, sold, leased, or delivered by Seller has been in
substantial conformity with all applicable contractual commitments and all
express and implied warranties, if any, and: (1) except for claims described on
Exhibits to this Agreement, Seller has no knowledge of any liability for
replacement or repair thereof or other damages in connection therewith other
than claims in the normal course of past business operations, and (2) except
for claims described on the Exhibits to this Agreement, to the knowledge of
Seller there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against Seller
giving rise to any liability for replacement or repair thereof or other damages
in connection therewith. None of the Product manufactured, sold, leased, or
delivered by Seller is subject to
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any guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease, and Seller has furnished a written copy of
such standard terms and conditions to Purchaser and designated in writing the
materials so furnished.
16. PRODUCT LIABILITY. To the knowledge of Seller,
except as set forth on EXHIBIT 3(p), Seller has no liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller giving rise
to any liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of the Product manufactured, sold,
leased, or delivered by Seller in the course of its prior operations of the
Business.
17. ENVIRONMENT, HEALTH, AND SAFETY
1. To the knowledge of Seller, Seller and its
Affiliates are in compliance in all material respects with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice is pending that
alleges any failure so to comply. Without limiting the generality of the
preceding sentence, Seller and its Affiliates have obtained and are in
compliance in all material respects with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under the
Environmental, Health, and Safety Laws.
2. To the knowledge of Seller, Seller and its
Affiliates have not handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in any
manner that could reasonably be expected to form the basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against Seller that would give rise to any liability of
Purchaser (1) for damage to any site, location, or body of water (surface or
subsurface), (2) for any illness of or personal injury to any employee or other
individual, or (3) otherwise under any Environmental, Health, and Safety Law.
3. To the knowledge of Seller, all properties
and equipment used in the Business of Seller and its Affiliates are free of
Extremely Hazardous Substances.
18. NOTICES AND CONSENTS. Except for Bulk Sale notices,
Seller has given all notices, has obtained all third party consents, has made
all filings, and has obtained all
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authorizations, consents, and approvals necessary for the consummation of this
Agreement in accordance with its terms.
19. OPERATION OF BUSINESS. Since January 1, 1998 and
with regard to the Business, Seller has not engaged in any practice, taken any
action, or entered into any transaction outside the ordinary course of the
Business (other than transactions contemplated by this Agreement), and Seller
has maintained normal business relationships with its lessors, licensors,
suppliers, customers, and employees.
20. PENDING ACTIONS. No action, suit, or proceeding
relating to Seller or one of its Affiliates is pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state, or
foreign jurisdiction or before any arbitrator that would (1) prevent
consummation of any of the transactions contemplated by this Agreement, (2)
cause any of the statements or representations in this Agreement to be
rescinded following consummation, or (3) affect adversely the right of
Purchaser to operate the Business after the Closing.
21. DISCLOSURE. To the knowledge of Seller, the
representations and warranties contained in this Section do not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained in this
Section not misleading.
4. PURCHASER'S AND BOLLINGER'S REPRESENTATIONS AND WARRANTIES.
Purchaser and Bollinger, jointly and severally, represent and warrant to Seller
that the statements contained in this Section are correct and complete as of
the date of the Closing Date (unless another date for such representation and
warranty is specifically set forth in this Agreement).
1. ORGANIZATION. Each of Purchaser and Bollinger are
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation and authorized to conduct its business in such
other jurisdictions as are necessary for the consummation of this Agreement.
2. AUTHORIZATION OF TRANSACTION. Each of Purchaser and
Bollinger has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Purchaser and Bollinger, enforceable in
accordance with its terms and conditions.
3. AUTHORIZATION OF ISSUANCE OF STOCK CONSIDERATION.
The authorization, issuance, sale, and delivery of the Stock Consideration
pursuant to this Agreement have been duly
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authorized by all requisite corporate action on the part of Bollinger and, when
issued, sold, and delivered in accordance with this Agreement and the terms of
Bollinger's Certificate of Incorporation, the Stock Consideration will be
validly issued and outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof, free and clear of all
encumbrances and not subject to preemptive or similar rights as to the
stockholders of Bollinger.
4. NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (1) violate any statute, regulation, order, or other
restriction of any government, governmental agency, or court to which Purchaser
or Bollinger is subject or any provision of the articles of incorporation and
bylaws of Bollinger or the limited partnership agreement of Purchaser, or (2)
cause a breach, default, termination, or acceleration of any contracts or
agreements by which Bollinger or Purchaser are bound.
5. BROKERS' FEES. Neither Bollinger nor Purchaser has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Seller could become liable or obligated.
6. PENDING ACTIONS. No action, suit, or proceeding
relating to Purchaser or Bollinger or any of their Affiliates is pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, or foreign jurisdiction or before any arbitrator that would (1)
prevent consummation of any of the transactions contemplated by this Agreement,
(2) cause any of the statements or representations in this Agreement to be
rescinded following consummation, or (3) affect adversely the ability of
Purchaser or Bollinger to perform their obligations under this Agreement or any
document or agreement executed in connection herewith after the Closing.
5. THE CLOSING.
1. DATE OF CLOSING AND EFFECTIVE DATE. The Closing is
taking place on the date of the signing of this Agreement. For purposes of
accounting between Seller and Purchaser with respect to Product sales and
shipments, the Parties agree that the Effective Date shall be controlling and
further agree to the settlement procedures in SECTION 9(f) for determining
these amounts.
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2. ITEMS DELIVERED AT THE CLOSING.
1. BY SELLER. Seller has delivered to Purchaser
each of the following items:
1. Certificate of existence issued by
the Secretary of State of Georgia and dated within fifteen (15) days of the
Closing Date, and a copy of the board of director consents approving this
Agreement;
2. a quitclaim to Purchaser of all of
Seller's right, title, and interest in and to U.S. Patent No. 5,169,360, No.
5,213,554, and Des. 330,234 along with a letter from Seller with regard to the
circumstances involving the failure of Seller to file appropriate
reinstatements of such patent; and
3. Properly authorized and executed
originals of the Body Pump Sublicense, Consulting Agreement, Step License,
Registration Rights Agreement, and Stock Option Agreement.
2. BY PURCHASER. Purchaser and/or Bollinger, as
appropriate, has delivered or caused to be delivered to Seller each of the
following items:
1. the Closing Cash Payment,
Convertible Note, and Stock Consideration; and
2. properly authorized and executed
originals of the Body Pump Sublicense, Consulting Agreement, Step License,
Registration Rights Agreement, and Stock Option Agreement.
6. INDEMNIFICATION BY SELLER. Subject to the provisions of
SECTION 8 AND 9(a), Seller agrees to defend, indemnify and hold Purchaser and
Bollinger harmless against any claims, expenses, judgements, attorney fees,
penalties, fines, damages, and losses incurred by Purchaser or Bollinger and
arising out of the following items:
1. RETAINED LIABILITIES. The Retained Liabilities;
2. DAMAGES. Any misrepresentation, breach of warranty,
or nonfulfillment of any covenant or agreement on the part of Seller under this
Agreement or from any misrepresentation in, or omission from, any certificate
or other instrument furnished or to be furnished to Purchaser or Bollinger by
Seller pursuant to this Agreement, or in connection with the transactions
contemplated hereby; and
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3. BULK TRANSFERS. The Parties not complying with all
applicable bulk transfer laws, including but not limited to the notice
provisions of same.
In the event that Purchaser or Bollinger receives notice of any claim
against it or Seller with respect to the foregoing, Purchaser or Bollinger
shall promptly notify Seller of same and Seller shall compromise or defend same
through counsel of its own choosing (who shall be the counsel set forth in
SECTION 11(i) or other counsel reasonably satisfactory to Purchaser), with
Seller further agreeing to inform Purchaser and Bollinger, as appropriate, in
writing from time to time as is reasonable regarding the status of such claim.
7. INDEMNIFICATION BY PURCHASER AND BOLLINGER. Subject to the
provisions of SECTION 8 AND 9(a), Purchaser and Bollinger, jointly and
severally, agree to defend, indemnify and hold Seller harmless against for
claims, expenses, judgements, attorney fees, penalties, fines, damages, and
losses incurred by Seller and arising out of the following items:
1. ASSUMED LIABILITIES. The Assumed Liabilities;
2. DAMAGES. Any misrepresentation, breach of warranty,
or nonfulfillment of any covenant or agreement on the part of Purchaser or
Bollinger under this Agreement or from any misrepresentation in, or omission
from, any certificate or other instrument furnished or to be furnished to
Seller by Purchaser or Bollinger pursuant to this Agreement, or in connection
with the transactions contemplated hereby; and
3. OPERATION OF THE BUSINESS. Purchaser's operation of
the Business after the Closing.
In the event that Seller receives notice of any claim against it or
Purchaser or Bollinger with respect to the foregoing, Seller shall promptly
notify Purchaser and Bollinger of same and Purchaser and/or Bollinger, as
appropriate, shall compromise or defend same through counsel of its own
choosing (who shall be the counsel set forth in SECTION 11(i) or other counsel
reasonably satisfactory to Seller), with Purchaser and Bollinger further
agreeing to inform Seller in writing from time to time as is reasonable
regarding the status of such claim.
8. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. Notwithstanding
the provisions of SECTIONS 6 and 7, but exclusive of the obligations provided
for in subsections (a) and (b) of SECTION 9:
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1. THRESHOLD AMOUNT. Seller shall have no obligation to
Purchaser for any claim for indemnification pursuant to SECTION 6 unless and
until the aggregate amount of all losses payable pursuant to SECTION 6 is at
least $35,000, but once such threshold is reached, Seller shall be liable for
all indemnification amounts payable under SECTION 6 without regard to such
threshold.
2. CEILING AMOUNT. Seller's maximum aggregate liability
pursuant to SECTION 6 shall not exceed $2,200,000.
3. SOLE REMEDY. The indemnification provided in
SECTIONS 6 and 7 shall be the sole and exclusive remedy after the Closing Date
for damages available to the Parties for the breach of any of the terms,
conditions, representations, or warranties contained in this Agreement;
provided, however, that nothing contained herein shall be deemed to prohibit
Seller, Purchaser or Bollinger from applying to a court of competent
jurisdiction for injunctive or other equitable relief.
4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller, Bollinger, and Purchaser in this
Agreement shall survive the Closing for a period of two (2) years. After such
date, neither Party may bring a claim for indemnification under this Agreement
unless notice of such claim was provided to the appropriate Party prior to the
end of such period.
9. POST-CLOSING AND OTHER MATTERS.
1. PRODUCT WARRANTY AND RETURNS AFTER CLOSING.
Purchaser agrees to perform all warranty work related to the Product sold by
Seller in the Business prior to the Effective Date and similarly agrees to
accept all customer returns of products sold by Seller in the Business prior to
the Effective Date. Product returns and warranty after the Effective Date
shall be the obligation of Purchaser.
2. SALES AND TRANSFER TAXES. Following the Closing,
Seller shall pay when due all sales and transfer taxes arising under Georgia
law, if any, payable in connection with this Agreement and the conveyances,
assignments, transfers, and deliveries to be made to Purchaser under this
Agreement. Following the Closing, Purchaser shall pay when due all sales and
transfer taxes arising under Texas law, if any, payable in connection with this
Agreement and the conveyances, assignments, transfers, and deliveries to be
made to Purchaser under this Agreement.
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3. POST CLOSING INSURANCE. Seller shall maintain in
full force and effect each of the liability insurance policies listed on
EXHIBIT 9(c) for a period of three (3) years following the Closing Date;
provided, however, that Seller may replace such policies with policies
providing coverage on terms and in amounts not materially less than the terms
and amounts of coverage set forth on the Exhibit.
4. PRIOR CONTROVERSY. Seller has previously filed an
action against Bollinger in United States District Court for the Northern
District of Georgia under Cause #1-98-CV-0351 for an alleged infringement or
misappropriation by Purchaser and/or Bollinger of the Intellectual Property,
and such action has been dismissed by Seller without prejudice.
Notwithstanding the dismissal without prejudice, the Parties agree that the
completion of the Closing under this Agreement shall resolve all questions and
issues related to such allegations and any and all other claims that Seller has
made, may have made, or may make against Purchaser and/or Bollinger, or an
Affiliate of either, for any and all actions and inactions of Purchaser and/or
Bollinger, or an Affiliate of either, with regard to the Product, or products
similar thereto, and the Intellectual Property prior to the Closing.
5. STOCK CONSIDERATION, STOCK OPTION AGREEMENT, AND
CONVERTIBLE NOTE. With regard to the Bollinger common stock that Seller
receives as the Stock Consideration and the Bollinger common stock or other
securities that it may receive under the Stock Option Agreement and the
Convertible Note:
1. PURCHASE ENTIRELY FOR OWN ACCOUNT. This
Agreement is made with Seller in reliance upon Seller's representation to
Company and Bollinger, which by Seller's execution of this Agreement Seller
hereby confirms, that: (A) the Stock Consideration and any Bollinger common
stock or other securities that Seller may receive under the Convertible Note
and/or the Stock Option Agreement (collectively the "Securities") are being and
will be acquired for investment for Seller's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and Seller has no present intention of selling, granting any participation in,
or otherwise distributing the same, except in compliance with applicable
federal and state securities laws; and (B) Seller does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person with respect to any of the Securities.
2. RELIANCE UPON SELLER'S REPRESENTATIONS. The
Securities have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), on the ground that the
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sale provided for in this Agreement and the issuance of the Securities
hereunder is exempt from registration under the Securities Act pursuant to
Section 4(2) thereof, and Company's and Bollinger's reliance on such exemption
is predicated on Seller's representations set forth herein.
3. RECEIPT OF INFORMATION. Seller believes that
it has received all the information Seller considers necessary or appropriate
for deciding whether to receive the Securities as consideration under this
Agreement. Seller has had an opportunity: (A) to ask questions and receive
answers from Company and Bollinger regarding the terms and conditions of the
Securities and regarding the business, properties, prospects and financial
condition of Company and Bollinger, and (B) to obtain additional information
(to the extent Company or Bollinger possessed such information or could acquire
it without unreasonable effort or expense) necessary to verify the accuracy of
any information furnished to Seller or to which Seller had access.
4. INVESTMENT EXPERIENCE AND COUNSEL. Seller is
experienced in evaluating and investing in securities of companies such as
Bollinger, is represented by legal and/or investment advisory counsel with
regard to this Agreement or has voluntarily elected to forego such counsel, can
bear the economic risk of its investment in the Securities, and has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of the investment in the Securities.
5. ACCREDITED INVESTOR. Holder is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the Securities Act.
6. RESTRICTED SECURITIES. The Securities may
not be sold, transferred, or otherwise disposed of without registration under
the Securities Act or an exemption therefrom, and, in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely.
7. LEGENDS. Each certificate evidencing
Bollinger common stock issuable pursuant to this Agreement may include a legend
in substantially the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
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TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (II) IN THE OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO COMPANY, REGISTRATION UNDER SUCH ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER."
6. POST-CLOSING SETTLEMENT. Within fifteen (15) days
after the Closing, Seller shall prepare a settlement statement (the "Settlement
Statement") and make available to Purchaser all records necessary for Buyer to
review and confirm the accuracy of the Settlement Statement. The Settlement
Statement shall set forth the Product sales and shipments after September 30,
1998 and the freight and other direct, third party charges attributable to such
sales and shipments. Within five (5) days after Purchaser's receipt of the
Settlement Statement, Purchaser shall deliver to Seller a written report which
contains any changes which Purchaser proposes to the Settlement Statement and
any requests for additional information Purchaser requests. Within five (5)
days after Seller's receipt of Purchaser's written report, Seller shall respond
in writing to Purchaser's written report. If the Purchaser and Seller reach an
agreement with respect to the payment due to either Purchaser or Seller under
the Settlement Statement, then any amount owed shall be paid within five (5)
days of such agreement.
10. RECOUPMENT UNDER THE CONVERTIBLE NOTE.
1. RIGHT TO RECOUPMENT. If any amounts are determined
to be recoverable by Purchaser from Seller under the provisions of SECTION 6,
Purchaser shall have the option of recouping all or any part of such amounts
(in lieu of obtaining any indemnification to which it is entitled under SECTION
6 or otherwise under this Agreement) by notifying Seller that Purchaser is
treating the recoverable amount as a prepayment of principal, and accrued
interest thereon, on the Convertible Note. Purchaser's right of recoupment
under this Section shall not be Purchaser's sole remedy, and Purchaser may
elect to pursue its other rights under this Agreement.
2. RECOUPMENT PROCEDURES. If Purchaser elects to
proceed under this Section, it shall provide written notice to Seller, and such
notice shall contain a reasonably detailed explanation of the subject matter of
the recoupment item and any appropriate supporting documents. Within thirty
(30) days after Seller's receipt of the notice, Seller shall deliver to
Purchaser a written response that contains any changes which Seller proposes to
the recoupment item and any requests for additional information that Seller
requests. Within ten (10) days after
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<PAGE> 24
Purchaser's receipt of Seller's written response, Purchaser shall respond in
writing to Seller's written response. If the Seller and Purchaser reach an
agreement with respect to the recoupment item, any amount owed shall be paid
within ten (10) days of such agreement.
3. GOOD FAITH EFFORTS. Purchaser, Bollinger, and Seller
shall each use its reasonable good faith efforts to agree with respect to any
proposed recoupment items no later than thirty-five (35) days after Seller's
receipt of the written notice under subsection (b) above. If an agreement has
not been reached within such thirty-five (35) day period, the matter shall be
resolved as provided in EXHIBIT 11(a). If Seller does not pay the amount owed
within the ten (10) day period under the last sentence of subsection (b) above,
Purchaser may set-off the recoupment item against the Convertible Note as
provided for in subsection (a) above. If Purchaser elects such set-off, it
shall provide written notice to Seller as to the amount and the method of the
set-off.
11. MISCELLANEOUS.
1. RESOLUTION OF DISPUTES. The Parties hereby
acknowledge that they will first attempt in good faith to resolve their
disputes through direct negotiation within thirty (30) days of the date either
Party notifies the other Party of the existence of a dispute. If a shorter
time period is indicated by the circumstances, the Parties agree that the time
period shall be reduced accordingly. If a matter remains unresolved between
the Parties after such time period for negotiations, the matter shall be
submitted to arbitration under the procedures set forth in EXHIBIT 11(a).
2. BULK TRANSFER LAWS. The Parties agree that the
applicable provisions, if any, of the Georgia state laws related to bulk
transfers (as that term is defined in the Uniform Commercial Code or other
applicable statutes of each such state) shall be waived in that Seller shall
not be required to comply with the terms thereof. As consideration for such
waiver by Purchaser, Seller does hereby agree to defend, indemnify, and hold
Purchaser and Bollinger harmless from, any claim of creditors, other Persons or
governmental entities that assert claims against either Seller or Purchaser or
Bollinger that would have been otherwise eliminated in the event that Purchaser
had required Seller to satisfy the provisions of the applicable bulk transfer
laws prior to the date of the closing of the transactions contemplated by this
Agreement.
3. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Neither
Party may issue any press release or make any public announcement
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relating to the subject matter of this Agreement without the prior approval of
the other Party; provided that Purchaser and Bollinger may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning Bollinger's publicly-traded securities.
If such a press release or announcement is made by Purchaser or Bollinger, it
agrees to use its reasonable best efforts to advise Seller prior to making the
disclosure.
4. NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties, and
the successors and assigns of the Parties as permitted by this Agreement.
5. ENTIRE AGREEMENT. It is expressly agreed by Seller,
Bollinger, and Purchaser, as a material consideration for the execution of this
Agreement, that this Agreement is intended by the parties to be the final,
complete, and exclusive embodiment of their agreement regarding the subject
matter of this Agreement; that there are, and were, no oral representations,
warranties, understandings, stipulations, agreements, or promises pertaining to
this Agreement or any expressly mentioned written documents that are not
incorporated in writing in this Agreement, and none shall be binding.
6. SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. Purchaser and/or Bollinger may
designate one or more of its Affiliates to perform its obligations hereunder
(provided that such designation shall not relieve Purchaser and/or Bollinger of
its obligations hereunder) and may make a collateral assignment of its rights
under this Agreement to any institutional lender who provides funds to
Purchaser for the acquisition of the Personal Property and the Business.
7. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
8. HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
9. NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given
after five (5) business days if it is sent by registered or certified mail,
return receipt requested,
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postage prepaid, and addressed to the intended recipient as set forth below or
immediately if it is hand delivered during normal business hours to the
addresses set forth below:
If to Seller: The Step Company
Attn: Mr. Richard P. Boggs
2250 Newmarket Parkway, Suite 130
Marietta, Georgia 30067
Telephone: 770-859-9292
Telecopy: 770-956-0578
With Copy To: Troutman Sanders L.L.P.
Attn: Joel S. Goldman
600 Peachtree Street N.E., Suite 5200
Atlanta, Georgia 30308-2216
Telephone: 404-885-3144
Telecopy: 404-885-3995
If to Purchaser Bollinger Industries, L.P.
or Bollinger: Attn: Glenn Bollinger
602 Fountain Parkway
Grand Prairie, Texas 75050
Telephone: 972-343-1122
Telecopy: 972-343-1199
With a copy to: George T. Johns
Tracy & Holland, L.L.P.
306 West Seventh Street - Suite 500
Fort Worth, Texas 76102-4982
Telephone: 817-335-1050
Telecopy: 817-332-3140
Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
10. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Texas
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
11. AMENDMENTS AND WAIVERS. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by Purchaser, Bollinger, and Seller. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not,
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<PAGE> 27
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
12. SEVERABILITY. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
13. EXPENSES. Purchaser, Bollinger, and Seller will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby, unless
another provision for an expense or fee is specifically set forth in this
Agreement.
14. GENERAL RULES OF CONSTRUCTION. This Agreement shall
not be strictly construed against either Purchaser, Bollinger, or Seller. No
remedy or election given by any provision in this Agreement shall be deemed
exclusive unless so indicated, but each shall, wherever possible, be cumulative
with all other remedies in law or equity. The parties acknowledge that each
party (and its counsel, if any) has had the opportunity to review and revise
this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or exhibits thereto.
15. INCORPORATION OF EXHIBITS. The Exhibits identified
in this Agreement are incorporated herein by reference and made a part hereof.
16. SPECIFIC PERFORMANCE. Each of the Parties
acknowledges and agrees that the other party would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other party shall be entitled to an
injunction or injunctions (without the need to post any bond or security) to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which it may be entitled, at law or in equity.
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<PAGE> 28
The Parties have executed this Agreement on October 15, 1998.
BOLLINGER INDUSTRIES, L.P. THE STEP COMPANY
By: By:
------------------------------- -------------------------------
Glenn D. Bollinger, CEO of Richard P. Boggs,
Bollinger Operating Corp., President
its general partner
Fed. ID# 75-2502573 Fed. ID# 58-1884312
The undersigned individual shareholders of Seller execute this Agreement for
purposes of:
1. jointly and severally affirming the representations and
warranties set forth in Section 3;
2. agreeing to jointly and severally provide to Purchaser and
Bollinger the indemnity and other obligations of Seller under Section 6;
3. jointly and severally agreeing to the obligations of Seller
under Section 9 and Section 11(b).
- ------------------------------- -------------------------------
Richard P. Boggs Lyle Ray Irwin
<TABLE>
<S> <C>
Exhibit 1(j) Intellectual Property
Exhibit 1(l) Les Mills License
Exhibit 1(m) Personal Property
Exhibit 1(n) Product
Exhibit 2(a) Other Assets
Exhibit 2(e) Allocation of Purchase Price
Exhibit 2(f) Assumed Liabilities
Exhibit 3(c) Noncontravention (Seller)
Exhibit 3(e) Title
Exhibit 3(f) Financial Statements
Exhibit 3(i) Legal Compliance
Exhibit 3(k)(7) Les Mills Sublicenses
Exhibit 3(l)(1) Intellectual Property Licensed to Purchaser
Exhibit 3(l)(2) Exceptions to Intellectual Property Representations
Exhibit 3(l)(3) Intellectual Property
Exhibit 3(m) Litigation
Exhibit 3(n) Liability Claims
Exhibit 3(p) Product Liability
Exhibit 9(c) Post Closing Insurance
Exhibit 11(a) Arbitration Procedures
</TABLE>
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<PAGE> 29
List of schedules to the Asset Purchase Agreement by and among Bollinger
Industries, Inc., The Step Company, and Bollinger Industries, L.P. dated as of
October 15, 1998, which are not filed herewith:
SCHEDULE DESCRIPTION
-------- -----------
1(j) Intellectual Property
1(l) Les Mills License
1(m) Personal Property
1(n) Product
2(a) Other Assets
2(e) Allocation of Purchase Price
2(f) Assumed Liabilities
3(c) Noncontravention (Seller)
3(e) Title
3(f) Financial Statements
3(i) Legal Compliance
3(k)(7) Les Mills Sublicenses
3(l)(1) Intellectual Property Licensed to
Purchaser
3(l)(2) Exceptions to Intellectual
Property Representations
3(l)(3) Intellectual Property
3(m) Litigation
3(n) Liability Claims
3(p) Product Liability
9(c) Post Closing Insurance
11(a) Arbitration Procedures
The registrant will furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission upon request.
<PAGE> 1
[BOLLINGER INDUSTRIES LETTERHEAD]
EXHIBIT 10.66
PRESS
October 22, 1998
FOR IMMEDIATE RELEASE
Bollinger Industries
602 Fountain Parkway
Grand Prairie, TX 75050
(972) 343-1000
Contact: Glenn Bollinger, Chairman and CEO
Rose Turner, CFO
BOLLINGER ACQUIRES RETAIL PRODUCTS DIVISION OF
THE STEP COMPANY.
SECOND ACQUISITION IN RECENT WEEKS.
GRAND PRAIRIE, TX -- "This is a combination of two excellent brands," according
to Bollinger Industries President Bob Bollinger.
Bollinger, a major brand in Fitness, announced only recently that it had
purchased Multi-Grip, another maker of fitness products. It followed that
announcement today with the news that it had completed an agreement for asset
purchase and licensing with The Step Company. The Step Company started the
explosion of Step aerobics with the launch of the Original Step in 1989.
Bollinger will immediately begin distribution of Step Company products to
retail. The Step Company will continue to serve the commercial club market.
"We're excited about this timing," Mr. Bollinger continued. "Next year is the
tenth anniversary of the introduction of the Step and step aerobics to the
fitness world. Few things have impacted any industry the way the Step hit
fitness. It swept through clubs, classes and the home market. Today, more than
18,000 health clubs in the US offer classes using the Original Step. Steps are a
mainstay product both in clubs and at retail. Bollinger has been a major player
in sales of steps for home use with products like our SoftStep(TM),
FlexStep(TM), and PrimeStep(TM). We're glad to be able to add the Original Step
to our line, and look forward to helping make the tenth anniversary and the next
decade memorable for both retailers and consumers.
"We're about depth and breadth in Fitness Products," continues Mr. Bollinger.
"And we know the importance of innovation and creativity in the industry.
That's why we feel so good about this deal. We increase our basic offerings, in
terms of product and price point, and we continue our history of fresh product
offerings and ideas."
"We believe that the sale of our Retail Products Division will be a perfect fit
with Bollinger's distribution network," commented Rich Boggs, President of The
Step Company. "This also allows us to focus our attention on the health club
market, which is the source of many quality products that reach retail."
Specific terms of the deal were not disclosed.
Bollinger is a major distributor of Fitness Accessories and fitness products.
Its products are sold at mass merchants and sporting goods stores throughout
the US, and in foreign markets. Its stock is traded over the counter (BOLL).
###
